The Spring Budget had a lot of focus on innovation-led growth. Twelve new low-tax investment zone areas were announced in an effort to kick-start the UK economy and boost growth by introducing specific tax and regulatory rules.
Although more detail is yet to come out, what seems promising about the refocused investment zones approach is that they don't just focus on tax and regulation, they also reference skills and infrastructure as part of the support package. Closer alignment of skills and innovation investment is something the UK Innovation Districts Group has been championing for a while. Another positive to take from the emerging Investment Zones is the focus on “bold and imaginative partnerships between local Government and research institutions”. It’s good to see the importance of partnership development and place governance come to the fore, as this is an essential component of successful innovation districts.
Another essential component of innovation clusters of all kinds is the strength of the networks they hold. With this in mind, a welcome addition to the Investment zones model could be support programmes akin to the REAP MIT model that focus on network building and activation across an innovation district.
The zones are clustered around research institutes such as universities of which eight English locations have been identified as eligible to host an investment zone and a further four will be identified in Scotland, Wales and Northern Ireland.
The eight areas in England are all located in Northern England continuing the government's levelling up commitment to increase domestic public R&D investment outside the Greater South East by at least 40% by 2030. Each Investment Zone will receive £80m over five years - nearing a £1bn investment to these twelve areas in government support. This money can be used to “offer tax incentives or to improve skills, provide specialist business support, improve the planning system or for local infrastructure in the zones.”
Jeremy Hunt’s pursuit of ‘prosperity with purpose’ speaks to the UK IDG’s inclusive innovation agenda that highlights the case for as many people as possible to contribute to, participate in and benefit from the UK’s innovation economy in terms of the design, delivery and diffusion. We need to see much more of this, with intentionality and focus, if we are to achieve real prosperity with purpose. And the new investment zones too must consider how they help deliver on this agenda. As acknowledged recently by Tom Bridges in his guest blog, there are a number of factors that will determine the success of investment zones.
Investment Zones’ success will depend on…
🏙️ Ensuring greater public sector R&D investment to crowd-in business investment
💰 Getting the fiscal incentives right
📝 Introducing faster planning, not less planning
🤝 Working together to develop the right mechanisms for sharing risk & reward
🔗 Linking innovation assets in major city centres with those in surrounding areas
🧠 Thinking beyond bricks & mortar
Congratulations to UK IDG members and supporters including Liverpool, West Yorkshire, West Midlands, East Midlands, Greater Manchester, South Yorkshire, Tees Valley and North East for being among the twelve identified areas for investment zones. We are looking forward to learning with you and supporting you along this journey.